OSHA Penalties to Increase Up to 80% in 2016

On Nov. 2, 2015, President Obama signed a two-year budget deal, called the Bipartisan Budget Act of 2015. One provision in the Act will allow OSHA to increase the maximum penalty amounts it imposes on employers that violate occupational safety and health standards, making it the first fine increase in 25 years. These increases will become effective by Aug. 1, 2016.

Justification for Increased Penalties

Many government agencies have the authority to annually adjust their maximum penalty amounts to reflect the cost of inflation, as shown by the consumer price index (CPI).

However, OSHA hasn’t been allowed to adjust its maximum penalty amounts since the penalties were enacted 25 years ago. The Act will allow OSHA to adjust the maximum penalty amounts to keep pace with inflation.

Amount of Increase

The Act requires OSHA to implement the new maximum penalty amounts in two phases:

An initial catch-up adjustment

An ongoing subsequent adjustment period

The initial catch-up period will take place in 2016 and will allow OSHA to increase the current maximum penalty amounts by up to 80 percent to account for the previous 25 years of non-adjustment.

However, the Act also gives OSHA the discretion to increase the current maximum amounts by less than 80 percent.

The Act requires OSHA to issue a proposed rule and solicit public comments on it, including:

Plans to increase the penalty amounts by less than 50 percent

Determining whether the full increase will have a negative effect on the economy or result in social costs that outweigh the benefits of the increase (the Office of Management and Budget must agree with this determination)

The second phase allows OSHA to annually adjust the maximum penalty amounts for inflation.

What to Expect in 2016

The Act requires OSHA to publish how it will implement the first inflation adjustment by July 1, 2016. The first adjustment must become effective by Aug. 1, 2016.

The first annual inflation adjustment will be allowed for 2017. OSHA will be required to publish annual updates by Jan. 15, 2017 to signal this increase and every year thereafter in the Federal Register.

To get a better understanding of the violation changes, contact a member of our ‘A’ team.

Jay Shelton is the Senior Vice President of Executive Risk at Assurance. With nearly 20 years of experience in the risk management experience, Jay leads the Executive Risk Team which focuses on both publicly traded and privately held Directors & Officers Liability, Errors & Omissions, Cyber, Crime, Employment Practices, Management Liability and other executive management coverages. His main responsibility is to identify and evaluate clients’ exposure and implement programs that will minimize risk. Jay is a veteran of the United States Marine Corps. He earned a Master's degree in Business Administration from Notre Dame University and Bachelor of Science degree in Criminal Justice from Indiana University. Jay is a member of the American Society of Safety Engineers, Professional Liability Underwriter Society (PLUS) and Risk Management Society (RIMS).

Thank you

Dear ,Thanks for your inquiry. We’ll review your request and be in touch soon. In the meantime, we invite you to visit the Assurance blog for the latest and greatest when it comes to insurance thought leadership and industry specific articles. Happy reading.-Your Friends at Assurance

Dear ,Thank you for your interest in a career with Assurance. All open positions are currently listed on our careers page. If you’re interested in learning more about us, connect with us on LinkedIn and like us on Facebook where you’ll learn about all of our company updates.-Your Friends at Assurance